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How Fear Holds Even The Smartest Leaders Back


David Philippi is CEO of Strategex, the premiere 80/20 Profit & Growth consulting firm.

I guide top leaders to explosive growth, and the key is getting them over their own fear. My company has delivered more than $3 billion in operating income improvements to our clients in 10 years. We helped one client drive stock prices up over 540% in eight years. This is not an unusual story. The growth is extreme. The success is mind-blowing.

What’s the secret? The 80/20 principle, or Pareto principle, as it is commonly known. Briefly, the 80/20 principle means 80% of the results are generated by 20% of the effort. In business, 80% of revenue comes from 20% of customers. You focus on that which drives results at the deliberate expense of that which eats resources.

That’s it. 80/20: a simple theory that results in brilliant simplicity. It starts by removing the complexity that prevents companies from success. Then, it becomes an exercise in profitable market share growth.

In the world of 80/20, fear certainly exists, especially in the first six months of implementing a new 80/20 strategy. Here is where I often see fear rear its ugly head—and how to overcome it.

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1. Asking For Help

Fear prevents some leaders from asking for help. Do they think help is a sign of weakness? Or are they afraid they will lose control? Are they afraid of embarrassment when they reveal what is behind the curtain?

Sometimes strategic concepts seem so simple we think we can do it alone, but successful leaders know a secret: You need a coach. In my world, I have seen far too many leaders make critical mistakes when implementing 80/20 without help from a guide. I helped fix one client’s self-administered 80/20; he mistakenly eliminated 50% of their customers (many of whom had massive potential) but didn’t change the fundamentals of the business. Had he asked for help from the start, he could have saved millions.

Remember: Starting a new strategy? Find someone who has done it successfully at least 10 times and let them guide you. Even Tiger Woods, the most dominant golfer in the sport, had a coach to help him improve his game.

2. Decision Paralysis

Leadership requires tough decisions. In my work, 80/20 analyses illuminate problems and their “correct” solutions, but leaders still have major strategic decisions to make. Sometimes at the beginning of an engagement, leaders will have a challenging time choosing between two excellent (but difficult) actions so they do nothing at all. The result? No actions, no results. Similarly, sometimes leaders must choose between two bad options. Nobody wants to choose a bad option, but there are times when we must choose the best bad option.

Remember: Poor leaders are not the ones who make bad decisions; they are the ones who make no decisions.

3. Change Aversion

Change is hard for everyone. Maybe that’s because change means that the way we did things before was wrong, or maybe it’s the uncertainty. Change aversion is the parent of some poor behaviors. This type of fear makes people spew anecdotal evidence in the face of data, spout rare exceptions as reasons not to change, or worse, resist change because of emotional attachment.

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For example, when data proves a historic product is not bringing profits (as it often reveals), some leaders fight to keep it. It is not good for business, yet it is hard to change. “That product goes back 40 years!” is not great reasoning to keep selling it.

Remember: Change management is crucial. We must communicate the purpose, the reason and the “why” behind the change if we want people to act.

4. The Need To Please Everyone

The key to 80/20 success is the concept of “fair but not equal.” Basically, identify your whale accounts that generate the most revenue and treat them exceptionally well at the expense of your underperforming customers.

We are often taught that every sale is a good sale and every customer is a good customer. But what about the accounts that suck resources and profit? They are killing companies. It doesn’t take an economist to see that a customer who produces $10K in revenue but costs $20K to serve is not a great customer.

Our teams put customer line simplification measures in place to make those customers profitable, offer them options or develop a severance plan for them. And yet, it is counterintuitive to have fewer customers, to raise prices and to treat people differently.

Remember: You cannot please everyone. Focus on pleasing your top accounts.

5. Delayed Gratification

We have all worked under people who change strategies monthly. You know the ones; they think it should take 30 days to transform a department or a company. And when it doesn’t work, they find the next strategy to try. Things devolve into the flavor of the day.

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With 80/20, the hardest work is in the beginning: making difficult decisions. Sometimes the results aren’t realized immediately. In some cases, it can take three to six months to see financial results. It can make some people feel like a failure, so they stop before things get good.

Remember: If you want short-term gratification, look elsewhere. (I can recommend some stiff drinks that will have you feeling good in a snap.) Business leadership is a marathon, not a sprint. A good strategy is not a project or initiative; it’s a long-term commitment.

Final Thoughts

Do not let fear sabotage your leadership capability. Do not let it destroy your potential to do what business leaders love: grow and succeed. In the words of Dale Carnegie, “Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy.”


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